Essay Example on Tax Investigation Audit According to Okonkwo 2014









Tax Investigation Audit According to Okonkwo 2014 tax audit is usually triggered by suspicion of fraud evasion and related offences Bassey 2013 opined that tax audit is a level of enquiry aimed at determining what level of fraud or willful default or neglect a taxpayer perpetrated and to obtain evidence for possible prosecution of the culprit This implies that tax audit centers on determining some unrevealed sources of revenue pointing to gross non compliance or it may be about proof of underpayment and fraud Supporting this Oyedokun defined tax audit as an inspection of the financial affairs and taxpayers business records so as to ensure that law and regulation were maintained in the amount of tax reported This reflects that the so aim of tax audit is to ensure that laws and regulations regarding tax revenue are maintained by taxpayers with the aim of increasing the revenue pool of the government Okonkwo 2014 observed that tax audit is an essential compliance tool in most tax jurisdiction all over the word as it maximizes the expected tax revenue to the government both in developed and in developing countries Expanding this notion Kircher 2008 revealed that tax audit revolves examination of an individual or organization s tax report by the relevant tax authorities in order to ascertain compliance with applicable tax laws and regulations of state 

Tax audit is necessary because it help the government to collect taxes paramount in financing budget and maintaining economic and financial order and stability Similarly Agumas 2016 submitted that ax audit ensure that satisfactory returns are submitted by the taxpayers to organize the degree of tax avoidance and tax evasion to ensure strict compliance with tax laws by taxpayers to improve the degree of voluntary compliance by taxpayers and to ensure that the amount due is collected and remitted to government In line with the submission of Badara 2012 on the objectives of tax audit in developing countries tax audit help the government to stabilize the process of tax administration by putting timely strategies in place to redress tax dispute between taxpayers and tax authority with the so aim of reducing tax evasion and avoidance and increase the compliance level The other purpose of tax audit is to achieve the voluntary compliance with the tax laws and regulations and to ensure that a higher tax compliance rate is achieved under the Self Assessment System eeVonn 2009 In the same vein Bitrus 2009 revealed that cogent out of the objectives of tax audit is to ensure that adequate accounting books and records exist for the purpose of determining the taxable profits or loss of the taxpayer and consequently the tax payable and that The tax computations submitted to the authority by the taxpayer agree with the underlying records 2 1 2 Tax Compliance

The non compliance of tax laws and regulations by taxpayers is a major concern for tax administration in developing countries and obviously beacons an urgent solution because of the indispensability of tax revenue to states development Verboon and Dijke 2014 reported that the willingness of individuals to comply with tax laws and regulations without force is known to be tax compliance Confirming this Badara 2002 defined tax compliance as the willingness of taxpayers to submit accurate satisfactory and complete returns in conformity with tax laws and regulations peculiar to a particular tax jurisdiction This implies that tax compliance revolves the readiness of taxpayers to corporate with tax laws and regulations with being forced or coerced Brown and Mazur 2005 noted tax compliance as a multi layered measure and hypothetically it can be defined by considering three different types of compliance such as payment compliance timely payment of all obligations filing compliance the timely filing of any required return and reporting compliance the accurate reporting of income and of tax liability The Organisation for Economic Cooperation and Development 2001 divided compliance into administrative compliance and technical compliance Administrative compliance refers to complying with administrative rules of lodging and paying This compliance can also be called reporting compliance or regulatory compliance The technical compliance refers to complying with technical requirements of tax laws Non compliance to tax laws and regulation is considered to be a cankerworm that has eaten deep into the revenue pool of State government in Nigeria 

The Central Bank of Nigeria 2008 reported that the contribution of personal Income Tax to total revenue of State and Local Government fall from 20 18 and 7 7 in 1999 to 12 4 and 1 6 in 2008 respectively The level of personal income tax compliance has been most disappointing non performing and unsatisfactory in Nigeria Kiabel Nwokah 2009a These observations suggest that the attitude of the taxpayers is poor The attitude towards taxation is an important factor that explains taxpayers behaviour Abani 2016 In the same vein The Price Water Coopers PWC report on Ease of paying Taxes Ranking show that Nigeria ranked 138 out of 183 countries investigated Further it indicated that the average tax compliance time in Nigeria is 936 hours as against the 318 hours benchmark for Sub Saharan Africa and 186 hours for the Organization for Economic Cooperation and Development DECD countries The contributions of income tax to total revenue in Nigeria fall from 19 8 in 1999 to 11 7 in 2008 and the tax ratio in 2009 was 11 the lowest in West Africa and below 15 that is recommended for low income countries This reveals the level of non compliance to tax laws and the reasons for low economic development in Nigeria

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